Iceland float for Oasis owner

The owner of high street fashion brands Karen Millen and Oasis yesterday turned its back on the London stock market and opted instead for a £300m flotation in Iceland.

Mosaic Fashions, which also owns the Coast and Whistles chains, will be the first foreign business to float on the Reykjavik exchange when it joins late next month and will become its eighth largest member and sole retail stock.

The company's size, relative to the rest of the market, was one of the factors that attracted Mosaic to Iceland. The company, created by the merger of Oasis and Karen Millen last year, also has two major Icelandic shareholders who drew management's attention to the attractions of the exchange.

Icelandic retailing investor Baugur, owner of Big Food Group and Hamleys, owns a 42% stake in Mosaic. Baugur is a powerhouse in Iceland with businesses spanning clothing and food retailing to DIY stores, a mobile phone operator, TV stations and a newspaper.

Baugur's adviser and sometime backer Kaupthing Bank also has an 11% stake in Mosaic. Last week Kaupthing announced a £547m agreed takeover of independent British banking group Singer & Friedlander.

Mosaic's chief executive Derek Lovelock denied that the company was "spurning" London merely at the behest of its Icelandic shareholders.

"It's very much about the size of the company, the size of the amount we are raising and the amount of liquidity there will be in the stock," he said. "It was felt we'd not be big enough for the UK."

Mosaic, which has 600 stores predominantly in the UK and Ireland, is seeking to raise £40m in an offering of new shares to both institutional investors and retail punters.

None of the current shareholders will be selling shares. Management holds about 19% of the business with the founders of Karen Millen - Kevin Stanford and Karen Millen - also holding shares.

The new stock being offered accounts for only 14% of the enlarged business, making Mosaic's "free float" rather small in terms of what would be acceptable to investors in London.

Following the listing the company will raise a further £50m through a bond issue.

Mosaic plans to use the cash to pay down the £77m of expensive mezzanine debt acquired in the Karen Millen takeover and expand that brand and Oasis overseas.

Oasis already has a presence in the Nordic region and is looking for expansion opportunities in eastern Europe. It also has a joint venture in China where there are 34 Oasis concessions and plans to double that number by the summer. By next spring there will be more than 100 Oasis stores across the country.